Health Care


Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis

March 20, 2013

Earlier this week I was invited to give testimony before a House Energy and Commerce Health Subcommittee hearing on “Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis.” A video of the entire hearing is available here (with my testimony beginning around at around 20:30), and you can read my written statement here.

posted by James C. Capretta | 12:30 pm
Tags: medicare, entitlement reform
File As: Health Care

The Top Ten Health-Care Bills for 2013

February 20, 2013

Over at National Review Online I outline ten health care bills that could receive bipartisan support in Congress and would limit the worst aspects of Obamacare.

1. DELAY
The Obama administration chose to delay many of the most controversial implementing rules of Obamacare during 2012 to avoid stirring up opposition to the president during the election year. That decision has now put everything behind schedule. Moreover, a majority of states have decided (as was their right) not to build the state exchanges envisioned in the law, leaving the task to the federal government. And there’s no direct appropriation available to the federal government for this task. So it’s quite clear that implementing the law by January 2014 will create significant and unnecessary chaos in the insurance marketplace. Republicans should seize the opportunity this state of affairs provides and push for a delay of the law’s implementation. The administration will of course vigorously oppose any suggestion of delay, but many employers, states, and health-sector participants would welcome it.

You can read the other nine proposals here.

posted by James C. Capretta | 11:33 am
Tags: Obamacare
File As: Health Care

The Incredible Lowering of the Medicare Drug Benefit Baseline

February 15, 2013

Over at e21 I have a short article on how the restrained growth of Medicare spending owes more to the market-oriented reforms in the Medicare drug benefit program enacted in 2003 than to the supposed cost-restraining features of Obamacare.

The talk of the supposed cost-restraining features of Obamacare has also distracted attention away from an actual trend in health spending that is worth noting. Last week, the Congressional Budget Office (CBO) released its annual updated projections for the entire federal budget, including health programs. And, in those projections, CBO dropped the projected ten-year cost for Medicare quite substantially—by $137 billion. The reason? Buried deep in the CBO report there’s this explanation: “the largest downward revision in the current baseline is for spending for Medicare’s Part D (prescription drugs).”

That’s an understatement. Of the $137 billion drop in the Medicare baseline, $104 billion—or 75 percent—was due to the drop in expected Medicare drug benefit spending. This is truly remarkable because CBO had already lowered the drug benefit baseline several times in the preceding years. With this latest revision, CBO’s part D projections bear almost no resemblance to what was expected to occur when the law was enacted in 2003.

You can read the rest of the column here.

posted by James C. Capretta | 11:32 am
Tags: Medicare Part D
File As: Health Care

Delay, Repeal, Replace

January 30, 2013

Jeffrey H. Anderson and I have an piece in The Weekly Standard on what conservatives can do to stop Obamacare and fix the problems with the American health care system.

Delaying the implementation of Obamacare would be important for three reasons: It would save hundreds of billions of dollars in federal spending. It would spare Americans from having their health care premiums spike until a somewhat later date. And it would move the onset of Obamacare much closer to the 2016 presidential election, which would put Obama’s centerpiece legislation at center stage in that race—as the future health of the nation demands that it be.

Of course, this is the last thing that Obama wants, but he may not have much choice in the matter. Once a possible delay gets floated by Republicans in Congress, it could gather momentum. Many governors, including some Democrats, are likely to support such a move because they see a train wreck coming in 2014 and are eager to avoid it. Moreover, many businesses, including insurers, would support a delay because they know the government is not remotely ready to implement Obamacare on schedule. Even a one-year delay would pay dividends in all of the ways listed above.

For those interested, the rest of the article can be found here.

posted by James C. Capretta | 12:53 pm
Tags: Obamacare
File As: Health Care

The Urgent Need for Genuine Health and Entitlement Reform

January 22, 2013

The editors of economics21.org recently invited Charles Blahous, David Malpass, and me to provide some commentary on the state of fiscal and monetary policy as President Obama begins his second term. In my contribution to the collaborative article, I make the case for market-friendly reforms to American health care entitlement programs.

At the heart of the nation’s fiscal challenges are the rising costs of the major health care entitlement programs -- Medicare, Medicaid, and the new subsidies provided by the 2010 health care law. In 1972, total federal spending on Medicare and Medicaid was just 1.1 percent of GDP. By 2010, the costs of these programs had risen to 5.5 percent of GDP, and CBO projections from last year show the costs rising to 9.1 percent in 2030 when the new entitlement spending from Obamacare is also added in and when plausible assumptions about on-going enforcement of arbitrary cost-cutting measures are used.

The prospects for seriously addressing the problem of health entitlement spending is not promising in the president's second term in large part because there is a sense in his administration and among congressional Democrats that Obamacare has already largely solved the problem. They argue that the provisions cutting future Medicare spending in the new law will work, and that numerous, government-initiated efforts to cut costs (such as the Accountable Care Organization program in Medicare) will fundamentally transform how health care is delivered in the United States.

You can read the rest of my piece, along with the contributions of David Malpass and Charles Blahous here.

posted by James C. Capretta | 12:09 pm
Tags: entitlement reform
File As: Health Care

The Project to Replace Obamacare Begins Now

January 8, 2013

As 2013 begins, encouraging a discussion about how to replace Obamacare might strike some observers as a case of particularly bad timing. After all, in the year just ended, the Supreme Court upheld most of the provisions of the law and the president won re-election. As a consequence, the best opportunities to remove the law from the books all disappeared. The tough reality now is that Obamacare is not going to be undone during the next four years. So why bring up an alternative plan at this point?

The answer is that replacing Obamacare is by necessity a long-term project; you have to start somewhere. Moreover, it remains essential. Like it not, health care policy is central to the struggle over the size and scope of governmental power. Without a better approach than Obamacare, there will be no success in limiting government or in lessening the dependence of citizens on the state.

It is also going to take a lot of work and political effort to build the political coalition necessary to move health care policy in a different direction. Indeed, one of the reasons Obamacare passed in the first place is because opponents of government-dominated health care never coalesced around a serious and workable alternative in the years prior to 2009. Moreover, those efforts that did take place to promote a real alternative, such as Sen. John McCain’s proposal from the 2008 campaign, fell far short because they were not preceded by the necessary policy and political groundwork.

But all is not lost. Obamacare is flawed legislation that is already forcing employers to cut back their hiring and limit hours of work. It will soon send premiums sky high for many Americans who already have insurance. Promises about the law’s coverage and cost-control effects were greatly exaggerated. There will come a time — sooner rather than later — when Americans will be ready to hear again about an alternative to Obamacare’s government-heavy approach. At that moment, which might coincide with the 2016 presidential election contest, Obamacare’s opponents must be ready with a viable, center-right, market-based alternative that can win public support. And the only way to be ready for a debate on health care in 2016 is to get to work now on the alternative plan. It takes that long to develop a workable framework, get it analyzed with credible numbers, and refine it to ensure it has broad appeal.

In that spirit, I am circulating again two essays on this subject from 2012. The first, co-authored by myself and Robert Moffit of the Heritage Foundation and published in the journal National Affairs, describes what we see as the fundamental principles of an effective, market-based reform plan. The second — a sequel of sorts to the first — is my effort to provide more detail on some of the key features of a workable alternative plan. It was published last month by the American Enterprise Institute in its Health Policy Outlook series.

Advocates of expansive governmental power are always more comfortable than their limited-government opponents talking about health care policy. It is far easier to sell “the government will take care of it” than to explain why a decentralized, market-driven approach will be better for voters anxious for certainty about their health care needs. Nonetheless, this fight cannot be avoided. Health care is too important to fiscal policy, to the American economy, and to the concerns of voters to be set aside as an unwinnable issue.

It is of course true that full replacement of Obamacare with a workable, market-based alternative will be an extremely difficult undertaking. But it is also true that a new direction in health care policy is crucial for the future prosperity of the country. And so, that being the case, it’s far better to get started on the effort now than to delay and thereby handicap the possibility of future success.

posted by James C. Capretta | 2:28 pm
Tags: Obamacare
File As: Health Care

Reforming Medicaid in Texas

January 3, 2013

Every state, including Texas, is struggling with the budgetary pressures associated with rapidly rising Medicaid spending. To its credit, the Texas Public Policy Foundation has been working for years to develop solutions to the growing Medicaid budget crisis. As part of its ongoing efforts to modernize the Medicaid program, the foundation reached out to me last year to prepare a report on what might be done to reform the long-term care component of Texas Medicaid. I was very pleased to work with my co-authors (Andrew Croshaw, Michael Deily, and Laura Summers) from Leavitt Partners on the project. Our goal was to develop recommendations that would allow the state of Texas to continue to provide vital services to patients even as the program would become more efficient and affordable for the state’s taxpayers, both in the short and long term.

The full report is available online hereA pdf version is available here.

posted by James C. Capretta | 11:22 am
Tags: Medicaid
File As: Health Care

Constructing an Alternative to Obamacare

December 14, 2012

In this month’s American Enterprise Institute Health Care Policy Outlook I have a paper describing a plan for fixing America’s health care system that uses market principles, consumer choice, and fiscal discipline, rather than the government-centered approach of Obamacare.

But while more Americans are against Obamacare than for it, polls also show that a strong majority of the electorate want the very real problems in the health system fixed—just without the massive expansion of governmental power and spending that characterize Obamacare. This strong impulse for a positive reform agenda could undermine a repeal effort if there is no realistic program being readied to replace Obamacare.

Fortunately for Obamacare’s opponents, much of the work needed to construct a viable alternative was already done  many years ago by a band of economists and health policy experts who have long argued that a market-based approach to reform would deliver far better results than one managed by the federal government, as Obamacare would be.

You can read the rest of the paper online at the AEI website, here.

posted by James C. Capretta | 10:47 am
Tags: defined contributions, health care reform
File As: Health Care

Medicare Reform After the Election

December 13, 2012

Over at e21 I have a column on the Medicare reforms that Republicans should pursue during the fiscal cliff negotiations, given the unwillingness of the Obama administration to consider any kind of premium support model.

But if premium support can’t be secured in this round of negotiation because of Democratic opposition, are there other reforms that are still worth fighting for?

The answer is yes, but to determine what they are requires a proper understanding of what is driving the cost problem in Medicare in the first place.

The most pressing problem in Medicare is the dominant and poorly designed fee-for-service (FFS) insurance model. Seventy-five percent of the beneficiaries are enrolled in FFS, with the other 25 percent enrolled in private plans (called Medicare Advantage). The FFS program is essentially a claims-paying machine. If a licensed provider renders a medical service to a beneficiary, the Medicare FFS program generally pays for the service, no questions asked. In that sense, it’s an FFS program modeled on the private insurance plans prevalent in 1965, when Medicare was created.

For those interested in reading more, you can find the rest of the article here.

posted by James C. Capretta | 1:20 pm
Tags: Medicare reform. fiscal cliff
File As: Health Care

Raising Medicare Eligibility a First Step Towards Deficit Reduction

December 6, 2012

I have a post today on the U.S. News and World Report’s Debate Club where I argue that the Medicare eligibility age should, like the Social Security retirement age, be raised by two years to help bring the entitlement program’s long-term costs under control.

The best idea is to bring the cost discipline of a functioning healthcare marketplace to Medicare. Under this model, beneficiaries would choose from among competing health plan offerings. Beneficiaries selecting less-expensive options would reduce both their own costs as well as the government's. This model has worked well to control costs in the Medicare drug benefit.

But pursuing more competition in Medicare does not preclude adopting other reforms too. Among the ideas now being discussed in budget talks between congressional leaders and the president is a rise in the Medicare eligibility age. Social Security's normal retirement age is already moving up from age 65 to 67 over about a two-decade phase-in period, but Medicare's eligibility remains at 65 (where it has been since the program was enacted in 1965).

For those interested, you can read and vote on the post at the Debate Club website here.

posted by James C. Capretta | 12:22 pm
Tags: Medicare
File As: Health Care

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